1997 jaxport implementation report

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JACKSONVILLE COMMUNITY COUNCIL INC.2434 Atlantic Boulevard, Suite 100

Jacksonville, FL 32207(904) 396-3052 Fax (904) 398-1469

JAXPORT: IMPROVEMENT AND EXPANSIONFINAL IMPLEMENTATION REPORT

to theJCCI BOARD OF DIRECTORSJanuary 24, 1997

The JCCI study on JAXPORT: Improvement and Expansion was released in June 1995. Anactive implementation task force with 16 members was chaired by Jack Connolly, who had been amember of the management team for the study. Formal implementation began quickly in July1995. Relatively few formal task-force meetings were held. The primary strategy was to meet one-on-one with appropriate key officials on each of the recommendations. In addition, task-forcemembers participated in several groups convened around issues related to JAXPORT. Therecommendations did not lend themselves to an implementation strategy of public meetings andwidespread citizen involvementThe recommendations fall into three major categories. A subgroup was formed to work on each: Jacksonville Port Authority (JPA) Subgroup: chaired by Jack Connolly; worked with JPAofficials on Recommendations 1, 2,5, and 6. Economic Development Subgroup: chaired by George Gabel; met with city officials and

worked in other ways on Recommendations 3 and 4. Florida Government Subgroup: chaired by Henry Thomas; worked on Recommendation 7.During the JCCI study, and as the implementation process began, the JPA had on the table aproposal for public approval of a ten-year, half-cent sales-tax increase in Duval County. The taxwas needed, theJPA said, to finance bonds for major seaport expansion and improvementsincluded in a master plan with a total, 20-year price tag of $934 million.The JCCI study's conclusions confirmed the economic-development value of JAXPORT andrecognized the need for the kinds of expansion and improvement projects proposed in the masterplan. However, it also recognized the unpopularity of the ta x proposal and the inadequacy of theJPA's efforts to "sell" it to the public.The tax proposal was initially scheduled for a vote during the March 1996 presidential-preferenceelection. Hence the initial urgency to get the JCCI implementation process going. Soon afterimplementation began, the JPA sought and received City~Council approval to move the vote to the

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September 1996 primary election. JPA officials had recognized that more time was needed toconvince voters of the desirability of the tax increase. An ad-hoc, private coalition of mostlybusiness people was formed to develop a full-scale campaign in favor of the tax. JCCI was invitedand participated in meetings, and coalition members read the JCCI study and acknowledged theneed to heed its recommendations as the campaign was planned.

Meanwhile, JCCI task-terce members were meeting with JPA officials, suggesting that the JPAhad much work to do before seeking voter approval of a tax increase. According to the studyrecommendations, this work should include developing and communicating a public mission, goals,and objectives, conducting detailed financial analyses and plans to back up the JPA's capital-improvement proposals, and conducting an extensive public-information campaign to make thepublic better aware of what JAXPORT does and what it means economically to citizens throughoutDuval County.By early in 1996, the JPA had backtracked further, withdrawing the tax proposal completely. Duringthe same period, the managing director of the JPA announced his resignation, effective when areplacement was brought on board. Given these events, the ad-hoc coalition disbanded. Instead,the Chamber of Commerce created a Port Development Task Force to review the JPA's masterplan and financial plans from a public accountability standpoint, consistent with the JCCIrecommendations. JCCI was represented on the committee, which worked for several months andconcluded, as the JCCI study had, that the JPA needed to strengthen its capital- and financial-planning efforts before again requesting public financial support.These events cleared the air, so that, in a sense, the JPA's response to the JCCI study got a freshstart by the spring of 1996, avowedly guided by the JCCI recommendations. Since then, the JPAhas made steady progress toward implementation of the four recommendations directed its way.Meanwhile, economic-cievelopment implementation took a different course. In October 1995,after unsuccessfully seeking a meeting with Mayor Delaney, JCCI task-force members met withFrank Nero, Downtown Development Authority director and point person for economic-developmentactivities in city government. He indicated that Mayor Delaney's economic-development policywould emerge from the results of the Economic Summit scheduled for November 1995. Uponrequest, Nero agreed to arrange for certain JCCI task-force members and staff to be invited to thesummit.The work of the summit was divided among several large subgroups, one of which concentrated anissues of JAXPORT and international trade. Several JCCI task-force members and staff attended.To a large extent, the intemational-trade subgroup covered the same ground the JCCI studycommittee had covered and came to the same conclusions, although the scope of this group'sconsiderations was broader.In subsequent months, the city convened several follow-up meetings of people involved in theinternational trade subgroup. Out of these meetings, plus additional planning within the Delaneyadministration, came a strategy to hire a consultant to help develop a vision for international trade inJacksonville. The consultant conducted his research through interviews and focus groups duringthe spring and summer of 1996 and drew on several JCCI studies (Workforce, Education andMilitary, as well as JAXPORT) for background information. JCCI task-terce members and staff wereboth involved.

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The consultant's report became the basis for a day-long working session, called the JacksonvilleInternational Leadership Conference, held in December 1996. At this conference, public andprivate people concemed with international trade and JAXPORT met to develop a vision, mission,and strategies to make Jacksonville a 'world-class dty" in intemational trade and tourism. Onceagain, JCCI was represented, especially in a working group on "community readiness," whichdeveloped strategies both to ensure that important resources are in place (education, jobs, banking,etc.) and that community awareness and support are achieved.The subgroup working on the single recommendation directed toward state government did notengage in direct lobbying at the state level. Instead, it played a local role of monitoring andencouraging. The JPA kept JCCI informed about legislative matters and about the activities of theFlorida Ports Council. This organization, the statewide trade association of Florida's seaports, playsan active legislative role.In August 1996, a new director was selected for the JPA. He demonstrated he meant business bybeginning his tenure on a city trade mission to Puerto Rico. In November, the JCCI task forceinvited the new director plus the chair of the JPA board to a meeting to assess the status ofimplementation. The results of the meeting reinforced the feeling task-force members already hadthat implementation, while not at all complete, is progressing successfully in the right directions, asof late fall 1996. The JCCI study has clearly become a meaningful guide, which JPA officials referto frequently as they continue making decisions toward expanding and improving JAXPORT.Given this positive situation, members of the implementation task force believe that the time is rightto present this final implementation report to the JCCI Board of Directors. The sections that follow,beginning on the next page, summarize the status of implementation for each of therecommendations. In each case, the recommendation is quoted, followed by the task force'sassessment of implementation progress. Following these sections, the task force presents its finalrecommendations to the board.

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1. The Jacksonville Port authority, (JPA) should clarify its mission, goals, andobjectives and make a concerted effort to inform the public so that citizens are ableto make informed decisions concerning public support for JAXPORT's marineactivities.TheJPA's mission should contain the following items: Operationsand capital replacement: JAXPORT'smarine facilities are operated in

a business~/ike manner, with sufficient revenue from port charges to supportoperations and debt service, as well as producing a surplus adequate to fundfuture capital replacements;

Capital improvements and expansion: JAXPORT'smarine facilities represent asubstantial capital investment in public infrastructure, which plays a major role insustaining and increasing jobs and businesses in the local economy. and whichtherefore deserves public financial support for improvement and expansion inresponse to market demands; and

Accountability: the JPA is fully and openly accountable to the public for theresults of its operations and capital investments.

The JPA should immediately develop and begin implementing the goals andobjectives necessary to accomplish its clarified mission and should publicize themission extensively and intensively to the citizens before it requests new publicfinancial support for port improvements and expansion.

Study-committee members were convinced that the JPA lacked a sense of public stewardshipand accountability and that until it developed this sense and demonstrated it convincingly tothe public, it would fail to gain support for public financing of port improvements andexpansion. Task-force members believe that, during the implementation period, JPA officialshave come to understand the importance of public stewardship and accountability and are nowplanning and making decisions based on this understanding. They are also making aconcerted effort to communicate with the public consistent with this understanding (seeRecommendation 5 below for more detail on the JPA's public communications).The JPA did not respond to this recommendation by engaging in a formal process of definingmission, goals, and objectives. However, its board and top staff did substantially rethink how itthinks of itself in relation to the public and how it communicates with the public. Task-forcemembers have found the change to be evident in meetings with JPA officials and in the JPA'spublic communications.Adopting a sense of public stewardship and accountability is only a first step. In the JPA'ssituation, it was a crucial step, which appears now to be in the process of being implemented.

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2. TheJPA should continue and intensify its planning to keepJAXPORTcompetitive asa port. It should focus this planning with the urgency necessary to take advantageof opportunities that may emerge rapidly for new and expanded trade throughJacksonville. It should immediately take steps to make the public aware of thesepotential opportunities and thejustification for a rapid response. TheJPA's planningshould include the following: continued promotion of Jacksonville's favorable location, seaport facilities, and

extensive multimodal transportation connections;The JPA has responded actively to virtually every item in this detailed recommendation. Thenew JPA administration appears to be clearly aware of the market opportunities that exist andare emerging, as well as the resources the JPA has, and will have after expansion, to respondto these opportunities. As revealed in the JCCI study, the previous administration focused itsmarketing on expanding container and automobile cargoes. The new administration is taking amore flexible approach to market opportunities, stressing the desirability of diversity in the mixof cargo. The new policy is being informed by detailed market research and is accompaniedby active marketing, as suggested by the high-profile visit to Puerto Rico.

detailed financial analyses of the potential risks, costs, and revenues to be.expected from proposedport improvements and expansion;

economic-impact analyses, updated at least every five years, on the primary andsecondary impacts of JAXPORT's existing operations and projected operationsafter proposed improvements and expansion; analysis of secondary impactsshould include potential costs of additional local-government infrastructure(roads, schools. etc.);

During the implementation period, the JPA has taken specific steps to conduct new, moredetailed financial analyses and economic-impact analyses. The Chamber's Port DevelopmentTask Force reviewed these efforts in detail, found some weaknesses, and made their ownrecommendations for improvement. JPA officials appear to have gotten the message and areworking actively toward implementing these items.

careful analysis of the environmental impacts of proposed port improvementsand expansion, and continued adherence to high environmental standards;

This item was included in the recommendation not because evidence existed of majordeficiencies but to ensure that the JPA is vigilant, in new expansion projects, to protectenvironmental assets. JPA officials assured task-terce members that all environmentalrequirements are being met. The task force did not further pursue implementation of this item.

investment in port improvements and expansion only in carefully deSignedincremental phases. driven by market demand and informed by the analyses offinancial risk, costs, economic impact, and environmental impact;

During the study, the JPA emphasized the wholeness and continuity of its 20-year master plan.This item suggests that the JPA might have more economic (and political) success by breakingdown its planning into more flexible, incremental phases. During the implementation period,

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the JPA heeded this suggestion by asking its planning consultant to redraft the master planwith more manageable, shorter-term phases and options. In the process, some majorrevisions were incorporated, based on new market and financial analyses, and the total pricetag declined substantially as a result. investment in further deepening of the St. Johns River shipping channel only if

market analysis suggests its necessity and if the feasibility study currentlyunderway clearly indicates that it can beaccomplished cost-effectively;JPA officials remain convinced that, for clear, market-related reasons, the St. Johns Riverchannel needs to be deepened soon from its current 38 feet to at least 42 feet. The Corps ofEngineers feasibility study mentioned in the JCCI study is still underway, so neither thepotential cost nor the availability of federal funds for the project is yet known. Task-forcemembers did not further pursue implementation of this item.

active participation in efforts to improve the possibilities of bringing cruise-shipbusiness to Jacksonville, including efforts to revise federal law, to allow foreign-flag cruise ships to call atmore than oneU.S.port consecutively; and

The new JPA administration appears more interested than the old one in bringing cruisebusiness to JAXPORT. Yet it remains aware of the limitations of Jacksonville as a cruisedestination. It understands that the key to success is to identify and fill a particular niche in thisspecialized market. Consistent with the new administration's flexible approach to the market,the JPA appears prepared to investigate the potential economic benefits of any emergingopportunity, including possibly cruise ships. Task-force members did not further pursueimplementation of this item. active investigation of ways to attract trade through the port that relies on local

manufacturing or processing of goods.Study-committee members felt strongly that the economic impact of JAXPORT could beenhanced if more of the cargoes passing through were subjected to manufacturing or otherprocessing while in Jacksonville. During the implementation process, JPA officials respondedthat the JPA cannot do much alone to implement this item. The JPA sees itself as being in theinternational trade business and, thus, should be expected to respond to opportunities in thetrade marketplace rather than conditions in the local economy. From this perspective, only astrong local and regional economic-development effort can enhance the manufacturing sectorand thereby attract cargoes for processing. This perspective leads directly to JCel's nextrecommendation.

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3. The Mayor of Jacksonville should take the lead, working with other public andprivate organizations involved in economic development, to develop a clear, long-range, integrated vision for economic development and major, public capitalimprovements in Northeast Florida, that includes the following: emphasis on expanding JAXPORT trade, recognizing both the large, positive

economic impact of JAXPORT and the imminent potential for substantialexpansion; and emphasis on attracting industries that manufacture or otherwise process goods

as they are transported through JAXPORT.Starting with the November 1995 Economic Summit and following up with the recently createdEconomic Development Commission and the December 1996 International LeadershipConference, Mayor Delaney has responded directly and positively to this recommendation.JAXPORT and international-trade issues were specifically addressed at the summit, and therehas been meaningful follow-up on these issues through the consultant process and theInternational Leadership Conference to plan a vision, mission, and strategies for Jacksonvilleas an international-trade city.The First Coast Manufacturers Association has been an active participant in all of theseactivities, so the cause of expanding manufacturing in the local economy has been wellrepresented. However, the direct link between manufacturing and trade has not been made ineconomic-development discussions in the way that this recommendation suggests. Inpractice, the chicken-egg relationship between the development of trade and manufacturing ismore complex.Despite this, overall progress on implementing this recommendation has been good. Itappears to be continuing and may be accelerating.4. The Mayor of Jacksonville should take the lead in making the JPA a full partner in

economic-development ettort. At the same time, the JPA should broaden itscurrent marine-marketing function to encompass full-scale participation in port-related economic-development efforts for NortheastFlorida.

Mayor Delaney seems to be heeding his part of this recommendation. For example, the JPAsits on the new Economic Development Commission and appears to be appropriatelyrepresented in the city's other economic-development activities. Also, the JPA and city, alongwith the Chamber, have been active partners in the consultant process and InternationalLeadership Conference to define a vision, mission, and strategies for Jacksonville as aninternational-trade city. The new JPA administration is responding by taking a more active rolein economic-development activities that are port-related but which go beyond simply marketingJAXPORT's facilities to potential customers.Task-force members believe that this recommendation is actively being implemented, at leastunder these two administrations.

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5, The JPA should immediately take steps to intensify its public-information efforts intoa major, ongoing campaign that will perlorm the following functions: inform the public clearly about the JPA's mission and operations (see

Recommendation 1,);

describe in detail JAXPORT's business operations and how they are funded; describe in detail the results of JPA's planning for investment in new port

infrastructure, including market demands and opportunities, potential risks,costs, beneTlts, and impacts, and JPA's justification for specific capital-improvement and expansion projects; and

describe in detail the financial ability of the JPA to finance new port infrastructureand the justification for public involvement in financing capital-improvements andexpansion projects.

This intensified public-information effort should be fully implemented and ongoingbefore the JPA seeks citizen approval for new public financial assistance for capitalimprovements and expansion.

The JPA responded to this recommendation with tangible efforts to expand and improve itspublic-information efforts. A special newspaper insert was published in the Florida Times-Union in October 1995. Several TV spots were produced and aired as paid advertising. Aweekly show is being produced on cable TV. Efforts were expanded to bring citizens to theJAXPORT facilities for guided tours. Visits to schools have been expanded. The Portfestevent was substantially expanded. JPA staff engaged in large numbers of speakingengagements with community groups. Along with these expanded efforts has come acommitment of substantially increased resources for public-information efforts.Task force members believe that the JPA has embraced the spirit and intent, as well as someof the specifics, of this recommendation and is proceeding, in its own way, to implement it.Most importantly, the JPA has made the connection between informing the public and earningits support on the one hand and seeking public financing for port improvements and expansionon the other.

6. The JPA, the City of Jacksonville, and the Jacksonville Chamber of Commerceshould seek citizen approval for public financing of new investments in portinfrastructure when required. Support for such investments should depend on theresults of the JPA's planning and its capacity to finance them with net operatingrevenues. Citizens should support public financing for projects that clearly arejustified and for which no other revenues are available. Specifically, the JPA, theCity, and the Chamber should actively support and the citizens should approveaddition of a half-cent of sales tax for ten years to finance port improvement andexpansion projects identified in its recently adopted master plan.

The study committee grappled with the question of whether or not to support the sales-taxproposal the JPA had on the table during the study period. The evidence available at that time

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suggested that no viable financial alternatives existed. Therefore, the committee, convinced ofthe need for port improvements and expansion, opted for the sales tax, contingent on theJPA's prior attention to Recommendations 1, 2, and 5.Implementation task-terce members did not object when the JPAwithdrew the tax proposal. Infact, they saw it as welcome relief from the time pressure, imposed on the JPA by theimpending tax vote, to respond quickly, and perhaps inadequately, to Recommendations 1, 2,and 5.As the JPA took steps to revise its master plan and to unbundle it into smaller, shorter-termsegments and options, it was also able to tackle the financing issue in smaller, moremanageable pieces. During the implementation period, specific financing plans were made for$100 milllon in capital expenditures over five years, to be paid for with bonds covered byexisting revenue sources, primarily Telecommunications-Tax dollars, one-quarter mill of theJEA's contribution to the city, and expanded funding from the State of Florida (seeRecommendation 7 below).Task-force members believe that JPA adoption of this more incremental capital- and financial-planning process is a positive step toward the long-run implementation of the intent of thisrecommendation and that the sales-tax proposal is now moot.

7. The Florida Governor and Legislature should take steps to provide additionalsupport for the major commercial seaports in the state. Thesesteps should includeexpanded financial resources for port improvements and expansion, as well asenhancement of the state's business environment in ways that will make Florida'sports more competitive.

Task-force members monitored legislative action on state funding for port improvements andexpansion through contacts with the JPA and the Florida Ports Council. After getting caughtup in veto politics in 1995, expanded "funding was approved by the 1996 Legislature andsigned by the Governor. Florida still does not provide port financial support to the extent thatneighboring states do, because of the large number of ports in Florida. However, the increasein funding for JAXPORT and permission to bond that money have expanded the total amountavailable from $2.4 million in 1994 to $32.7 million in 1996, helping to make possible anincremental financing plan for JAXPORT expansion and improvement.Task force members believe that the State of Florida is currently making a good-faith effort tosupport its ports and, given the overall public-financing situation, cannot be expected tocommit much additional funding at this time.The Chiles administration has taken a variety of steps to improve the state's overall businessenvironment, primarily by searching for ways to cut through regulatory red tape. Task-forcemembers did not pursue this aspect of the recommendation beyond monitoring the mainstreammedia. The perception in the business community is that much improvement remains to bemade. If the administration's efforts do payoff in the long run, JAXPORT will be one of thebeneficiaries.

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Note: The JCCI study issue intentionally sidestepped an issue that recently has reemerged,whether the JPA should be split structurally into two authorities, one for airports and one forseaports. JCCI's issue was framed to include only the seaport side of the JPA, so thestructural question was not addressed.

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Recommendations to the JCCI Board of DirectorsThe implementation task force recommends that the JCCI Board of Directorsdiscontinue the formal implementation process for the JAXPORT Study.The time seems right for this decision. The implementation process has borne substantial fruit.The JPA and the city have both responded positively to the study and are moving in positivedirections toward implementing its recommendations. The JCCI study has become arecognized guidebook and valued source of information for those involved in JAXPORTissues.Individual members of the implementation task force intend to remain active in JAXPORTissues. JPA officials have invited the continuing advisory involvement of these individuals,recognizing their acquired expertise, through the JCCI study process, and their commitment tothe improvement of JAXPORT for the benefit of the entire community. At least some intend toaccept the invitation.However, task-terce members recognize that full implementation of the recommendations willtake years and that positive trends at the moment might not be sustained in the future.Therefore,The implementation task force recommends that the JCCI Board of Directors authorizethe task force to reconvene after one year, and perhaps annually for several years, toreassess implementation progress and, if they feel the need, to ask the Board to reopenthe formal tmplementatlonprccees.

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1997 jaxport implementation report

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